For quite a while now it has been quite uncommon for a gap-up opening to be sold, but today we are seeing a very good example of it. Traders are fading the open aggressively, and have the small-caps (iShares Russell 2000 Index (IWM) ) quickly into the red, while Amazon (AMZN) , Action Alerts PLUS holding Facebook (FB) , Tesla (TSLA) and a few other big-caps are holding up the senior indices. Breadth is still green, but fading very fast.
The pattern that has worked so well for the bulls has been early weakness and closing strength. We have not had as many strong closes lately, but there still has been strong intraday support and dip buying. When that dynamic changes, the whole character of the market changes.
So far this morning I've cut quite a few positions. I continue to hold Aurinia Pharmaceuticals (AUPH) , which has been my top biotechnology pick lately, and I am interested in adding to Global Blood Therapeutics (GBT) following a big target increase to $73 by Wedbush this morning. I prematurely cut Nektar Therapeutics (NKTR) , which continues its strong move.
While the reversal of the gap-up open is quite ugly, what it is going to be most important is whether support stays strong and the buyers show interest in the afternoon. Neither bulls nor bears have been capable of developing momentum lately -- and that is what we have to watch out for.